Alamo Group Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the third quarter of 2026 were $403.1 million, a 4.0% decrease compared to $420.0 million in the third quarter of 2025.
• Net income was $2.0 million ($0.17 diluted EPS) compared to $25.4 million ($2.10 diluted EPS) in the prior year quarter.
• Adjusted net income was $24.9 million ($2.06 adjusted diluted EPS) compared to $28.2 million ($2.34 adjusted diluted EPS) in the prior year quarter.
• Adjusted EBITDA was $52.4 million (13.0% of net sales) compared to $55.0 million (13.1% of net sales) in the prior year quarter.
• Gross profit was $76.1 million compared to $101.7 million in the prior year quarter; adjusted gross profit was $99.8 million (24.7% of net sales) compared to $102.2 million (24.3% of net sales).
• Selling, general and administrative expenses were $67.6 million compared to $59.9 million in the prior year quarter; adjusted SG&A was $56.0 million (13.9% of net sales) compared to $56.6 million (13.5% of net sales).
• The quarter included $33.3 million of net pre-tax charges related to divestitures and wind-downs, including $7.3 million in sales reduction, $15.5 million in cost of sales, $9.0 million in SG&A, and $1.5 million in other income/expense.
• Cash and cash equivalents were $230.7 million; total debt was $232.3 million, resulting in net debt of approximately $1.7 million.
• Net cash provided by operating activities for the last twelve months was $158.3 million, representing 204% of net income for the same period.
• For the first nine months of 2026, net sales increased 3.3% to $1.3 billion compared to $1.2 billion in the prior year period.
• Adjusted EBITDA for the first nine months of 2026 was $175.6 million (13.8% of net sales) compared to $172.1 million (14.0% of net sales) in the prior year period.
• Diluted EPS for the first nine months of 2026 was $5.14 compared to $7.31 in the prior year period; adjusted diluted EPS was $7.43 compared to $7.67.
• Net cash provided by operating activities for the first nine months of 2026 was $83.2 million; capital expenditures were $16.1 million.
• Available borrowings under the revolving credit facility were $363.6 million.

Guidance and Future Outlook:

• Management expressed confidence in the underlying strength of the business, citing strengthened order intake during the third quarter, particularly in vacuum trucks and sweepers.
• The company anticipates that current backlog levels support appropriate customer lead times.
• Management believes remaining liquidity and cash flows from operations remain sufficient to meet anticipated operating and capital requirements following the acquisition of Econ.

Business Segments and Product Lines:

• Industrial Equipment Division: Net sales were $232.8 million, a 5.8% decrease compared to $247.0 million in the prior year quarter. Excluding the Petersen acquisition, sales decreased approximately 12.6%. Adjusted EBITDA was $31.1 million (13.4% of net sales) compared to $38.2 million (15.5% of net sales). Margin pressure was attributed to material and freight inflation and lower sales on fixed costs.
• Vegetation Management Division: Net sales were $170.4 million, a 1.5% decrease compared to $173.1 million in the prior year quarter. Excluding a $7.3 million reduction from divestitures, sales increased 2.7%. Adjusted EBITDA was $21.3 million (12.5% of net sales) compared to $16.8 million (9.7% of net sales).
• Portfolio Optimization: The company substantially completed planned portfolio optimization initiatives, including the sale and wind-down of Dixie Chopper® and Boxer® product lines.
• Acquisitions: On October 27, 2026, the company acquired Econ Engineering Group Limited for £120.0 million ($158.7 million), expanding its industrial portfolio of vocational truck brands.

Market and Competitive Landscape:

• Industrial Equipment Division sales were impacted by softer end-market conditions and the timing of orders earlier in the year.
• Vegetation Management Division sales reflected improved manufacturing throughput in several businesses.
• Order intake strengthened during the third quarter, reinforcing confidence in the business despite revenue declines.
• Backlog at September 30, 2026, was $521.3 million compared to $618.3 million at September 30, 2025. Industrial Equipment backlog was $350.4 million (vs. $438.1 million), and Vegetation Management backlog was $170.9 million (vs. $180.2 million).

Risks and Challenges:

• The company faced elevated material and freight costs which caused margin pressure in the Industrial Equipment Division.
• Pricing actions taken to address higher costs lagged inflation during the quarter.
• Divestiture actions resulted in discrete tax impacts that temporarily increased the effective tax rate.
• Forward-looking statements note risks including adverse economic conditions, supply chain disruptions, labor constraints, inflation, geopolitical risks, tariffs, trade disputes, and weather.

Management Commentary and Tone:

• CEO Robert Hureau stated the strategy focuses on strengthening portfolio quality and improving margin profiles.
• Management highlighted the completion of portfolio optimization and the acquisition of Econ as key steps to sharpen strategic focus and position the company for improved profitability.
• Hureau expressed pleasure with the steady improvement in the Vegetation Management Division and confidence in the teams' progress toward restoring operating margins to healthy levels.
• Management noted that while revenue declined, order activity remained solid, reinforcing confidence in the underlying strength of the business.

Other Key Points:

• The acquisition of Econ Engineering Group Limited was funded using borrowings under the revolving credit facility.
• The company reported $33.3 million of net pre-tax charges associated with the wind-down of businesses, including inventory valuation adjustments and impairment of intangible assets.
• Dividends paid for the first nine months of 2026 were $12.3 million.
• Common stock repurchased for the first nine months of 2026 was $10.9 million.
• Proceeds from the sale of businesses, net of cash disposed, were $4.7 million for the first nine months of 2026.
• Amortization expense increased to $5.1 million in the quarter, primarily attributable to the acquisition of Petersen Industries.